Annuity vs. Amortization

By Jaxson

Main Difference

The main difference between Annuity and Amortization is that the Annuity is a series of payments made at equal intervals and Amortization is a Wikimedia disambiguation page

  • Annuity

    An annuity is a series of payments made at equal intervals. Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments. Annuities can be classified by the frequency of payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other regular interval of time.

    An annuity which provides for payments for the remainder of a person’s lifetime is a life annuity.

  • Amortization

    Amortisation (or amortization; see spelling differences) is paying off an amount owed over time by making planned, incremental payments of principal and interest. To amortise a loan means “to kill it off”. In accounting, amortisation refers to charging or writing off an intangible asset’s cost as an operational expense over its estimated useful life to reduce a company’s taxable income.

  • Annuity (noun)

    A right to receive amounts of money regularly over a certain fixed period, beneficiaries.

  • Amortization (noun)

    The reduction of loan principal over a series of payments.

  • Amortization (noun)

    The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful life of the asset.


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